It’s a bird… it’s a plane… it’s….
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For a very long time the super broker was the epitome of success in commercial real estate. They were the wise consumers of information who knew grudges, phone numbers, zoning rules, tenants, contractors, designers, and everything else that could make a deal happen. The super broker’s name rightfully stood as the engine in pushing commercial real estate forward.
So then why are so many firms downplaying or failing to retain their star power?
Bob Knakal was booted from JLL (JLL) earlier this year, and one of the reasons was reportedly because he was taking too much attention away from the firm. Darcy Stacom left her perch at CBRE and is starting her own firm. Just last week Newmark (NMRK)’s Greg May was shown the door at the L.A. office.
Peter Riguardi, who heads JLL’s New York office, gave Commercial Observer some of his thinking a few weeks ago.
“In an investment bank, the client comes first, the firm someone works for comes second, and the individual comes third,” Riguardi said. “In the real estate service industry, the client comes first, but a lot of times — especially in brokerage — the individual comes second, and the company comes third. You’re not going to survive at JLL unless you feel like JLL comes second.”
Which is not a completely unreasonable stance, but the individual departures will certainly have an effect on business.
When Adelaide Polsinelli left Marcus & Millichap (MMI) to go to the now-defunct Eastern Consolidated, and from Eastern to where she now sits at Compass, her clients came with her.
“They don’t care which firm I’m with,” Polsinelli told CO. “They just want to work with me.”
That’s an important point for all the big firms to consider as they weigh the broker’s position in their future calculus.
Keep calm and borrow on
While the year began with lots of optimism that interest rates would be coming down in 2024, things have stumbled coming out of the gate, and those of us at CO have been wondering whether the oft-promised rate cuts will actually happen.
Fed Chair Jerome Powell stepped in this week to pat us on the head, rub our shoulders, and assure us it’s all going to be all right.
“We believe that our policy rate is likely at its peak for this tightening cycle and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said at the press conference after the Fed meeting where the central bank’s board announced no immediate action. (Hey, that’s better than a rate hike.) “The economic outlook is uncertain, however, and we remain highly attentive to inflation risks. We are prepared to maintain the current target range for the federal funds rate for longer if appropriate.”
And, while the stock market immediately rose on Powell’s signal that there would be three rate cuts this year, things should still be kept in perspective.
“We started the year thinking that we would see as many as six rate cuts, and I think many would be quite happy with one or two at this point,” said Lisa Pendergast, executive director at the Commercial Real Estate Finance Council.
He’s baa-aack…
We’re talking, of course, about everybody’s favorite flex office guru, Adam Neumann.
The WeWork founder is apparently getting in on the action at Miami Worldcenter (that’s where CO hosted our multifamily conference earlier this month!) where his new company Flow is proposing a mixed-use project consisting of 40,000 square feet of office and another 19,000 square feet of retail.
Meanwhile, WeWork is holding on by its fingernails to a lease at Constellation Place in Century City, in an attempt to keep operations going in Los Angeles.
Speaking of figures we thought would be headed for the real estate exits, Donald Trump’s $464 million judgment against him is not standing in the way of his real estate ambitions.
The Trump Organization revealed plans last week to build a three-story, 45,000-square-foot office at 115 Eagle Tree Terrace in Jupiter, Fla. However, the former president has not yet shared his plans with the city, and could face zoning problems given that it is a residentially zoned area. But no one can say that Trump hasn’t cleared bigger obstacles in the past.
Think big
One of the words that could have been used to sum up real estate events last week could have been “big,” or one of its variants.
Big plans, like the one unveiled for Maggie Miracle’s $1 billion creative office tower called The Star on Sunset Boulevard in Hollywood.
Big expectations, like the high demand for medical office space in New York.
Big financings, like the $413 million that Bridge Industrial managed to finagle from Bank OZK, Mesa West Capital and Morgan Stanley to build a 2.48 million-square-foot logistics park in Tacoma, Wash.
Even bigger financings, like the $475 million Worthe Real Estate Group and Stockbridge secured from Wells Fargo (WFC) and Morgan Stanley on the 800,000-square-foot Warner Bros. headquarters designed by Frank Gehry.
Bigger still finance packages, like the one that CBRE Investment Management and Hillwood Investment Properties closed for $756 million from Bank OZK and BDT & MSD Partners to build the Speedway Commerce Center in Fontana, Calif.
Biggest leases, like the 230,000-square-foot one Pfizer signed for an oncology division at the Torrey View complex in San Diego, marking the city’s largest life sciences lease so far this year.
The biggest sales in town, meaning PRP Real Estate Investment’s $323 million purchase of Market Square in Washington, D.C, which is the biggest office trade in the nation’s capital since the year began. (And which is probably an incredible bargain for PRP given that Market Square went for $611 million when it last traded in 2011.)
Oh, yeah. And then there’s Blackstone’s $2.35 billion refinancing of its industrial portfolio that spans 11 states. We’re not sure the word “big” is really adequate there.
The future? Bosh!
You know the phrase “The future is female”?
We would like to take exception and say that the present is female, too.
At least that was what the folks at CO were feeling as we did our annual women’s issue in honor of Women’s History Month.
All month long we had been speaking to prominent female executives like Cushman & Wakefield (CWK)’s (relatively) new CEO Michelle MacKay; reporting on big promotions in the field like Michelle Herrick taking over as deputy head of real estate for JPMorgan Chase (JPM); or looking at the first-ever professional women’s sports stadium in Kansas City, Mo.
But last week’s print edition of CO is worth taking a slow read through and letting everything sink in.
We spoke to Wells Fargo’s big cheese, Kara McShane, about the team that she had developed around her, including Rachel Jinich and Vanessa Rodriguez, both of whom McShane elevated to leadership roles. We examined the new Miami apartment building, The Julia, inspired by Miami founder Julia Tuttle (the only woman to have founded a major American city). We looked at WX’s efforts to get more women on corporate boards after several years of attrition. And, finally, we looked at the next generation of women in proptech (one of whom is only 20 years old and has already logged stints at NASA and SpaceX — yeah, we felt immediately tired, too).
It should make for some engrossing reading on this Palm Sunday.
And, if you’re celebrating Purim this weekend, on behalf of all of us on the edit team: May you drink enough that you can’t tell the difference between the phrases cursed be high interest rates and blessed be high cap rates.
See you next week!